In an effort to simplify e-commerce and increase the appeal of its online payment platform to merchants, Amazon Payments, a subsidiary of Amazon.com, on Thursday announced the availability of PayPhrase, a way for online shoppers to authorize purchases without entering a username and password.

"PayPhrase solves the headache of trying to keep track of all the different usernames and passwords people use to shop on various sites across the Web," said Amazon PayPhrase general manger Matt Williams in a statement. "With PayPhrase, all you need is one phrase and one PIN to pay online."

Using a customized phrase, such as "Stop Me Before I Shop Again" or "Get Ready For My Customer Support Call," consumers at Amazon.com or at other Web sites that accept PayPhrase can quickly preview purchases and authorize them with a four-digit PIN.

A PayPhrase must be at least two words, at least four characters, and cannot exceed 100 characters. No special characters or numbers are allowed.

PayPhrase also cannot be used to purchase digital goods, like MP3 downloads.

Nonetheless, PayPhrase should find enthusiastic use among parents with dependents who need to shop online: PayPhrases and PINs can be shared with family members (or anyone for that matter), enabling them to make online purchases that are subject to a pre-set spending limit and an optional approval process.

Checkout By Amazon -- the Amazon payment service that works with PayPhrase -- costs the same as Google Checkout and PayPal for basic transactions, without volume discounts: 2.9% + $0.30 per transaction.

Elizabeth Robertson, director of payments research at Javelin Research, says PayPhrase offers a way to accelerate transactions and to keep payment information with a single source rather than multiple merchants.

Robertson believes the benefit to merchants of not having to worry about payment data security is worth more than the potential value of payment information as business intelligence.

"The net is it's more beneficial to not have the expense of PCI compliance and the risk of storing payment data," she said. "Ultimately, if a merchant like Amazon is facilitating payment transactions for multiple merchants, they in some way may have more information [than their partners] about payment purchase behavior, but that's also available through the payment network."

A typical use for data of this sort is monitoring for fraud.

Robertson says that although PayPal is in the best position in terms of market share and the diversity of its offerings, there's also something to be said for diversity of payment options.

"When merchants offer alternatives to standard cards, consumers are often interested in having those alternatives and it can increase sales," she said. "Merchants do benefit from offering alternatives. The question then is how many and who do I want to be associated with?"

InformationWeek and Dr. Dobb's have published an in-depth report on how Web application development is moving to online platforms. Download the report here (registration required).